Portfolios for Long-Term Investors
54 Pages Posted: 22 Mar 2021 Last revised: 7 Jul 2021
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Portfolios for Long-Term Investors
Portfolios for Long-Term Investors
Date Written: February 22, 2021
Abstract
How should long-term investors form portfolios in our time-varying, multi-factor and friction-filled world? Two conceptual frameworks may help: First, look directly at the stream of payments that a portfolio and payout policy can produce. Second, include a general equilibrium view of the markets’ economic purpose, and the nature of investors’ different preferences, risk-taking ability, and function in that equilibrium. These perspectives can rationalize some of investors’ behaviors, suggest substantial revisions to standard portfolio theory, and help us to apply portfolio theory in a way that is practically useful.
Keywords: Portfolios
JEL Classification: G11, G12
Suggested Citation: Suggested Citation